LTV:CAC Ratio Calculator
Reviewed by Hamza Gujjar, Algorithm Architect & Software Developer
Last updated: July 27, 2026LTV:CAC Ratio Calculator
Does the revenue a customer generates over their lifetime actually justify what it cost to acquire them? The LTV:CAC ratio is the single most watched unit economics metric for answering that question.
Ratio = Customer Lifetime Value / Customer Acquisition Cost
Example
LTV of $300, CAC of $75:
Ratio = 300 / 75 = 4.0:1 (healthy)
Reading the Ratio
| Ratio | Interpretation |
|---|---|
| Below 1:1 | Unsustainable - losing money on every customer |
| 1:1 - 3:1 | Below healthy benchmark - thin margins |
| 3:1 - 5:1 | Healthy - commonly cited sustainable range |
| Above 5:1 | Very high - may indicate underinvestment in growth |
A ratio around 3:1 is widely cited as a healthy target - high enough to comfortably cover overhead and fund growth, but not so high that the business is leaving profitable growth opportunities on the table by under-spending on acquisition relative to what it could sustainably afford.